Question

Renaissance Creations restores antique stained glass windows. All jobs generate some breakage or improper cuts. This scrap can be sold to stained glass hobbyists. Renaissance Creations expects to incur approximately 45,000 direct labor hours during 2013. The following estimates are made in setting the predetermined overhead rate for 2013:
One job that Renaissance Creations completed during 2013 was a stained glass window of the Pierce family crest that took 125 hours, and direct labor is invoiced at $20 per hour. Total direct material cost for the job was $890. Scrap that was generated from this job was sold for $93.
a. What was the predetermined overhead rate (set on the basis of direct labor hours) for 2013?
b. What was the cost of the Pierce stained glass window?
c. Prepare the journal entry to record the sales value of the scrap from the Pierce stained glass window.
d. Assume instead that only certain jobs generate scrap. What was the cost of the Pierce stained glass window?

Answer 1

Answer:

hello your question has some missing information attached below is the missing information

answer :

a)  $7

b)  $4265

c) attached below

d) $4192

Explanation:

a) determine the predetermined overhead rate

= Total estimated overhead / estimated direct labor hour

Total estimated overhead = $315,000

estimated direct labor hour = 45,000

hence predetermined overhead rate = 315,000 / 45,000 = $7

b) calculate the cost of the Pierce stained glass window

Direct material cost = $890

number of labor hours = 125

direct labor cost = $20 per hour

predetermined overhead rate = $7

∴cost of glass window = [ ( 890 + ( 125 * 20 ) + ( 125 * 7 ) ] = $4265

c) Journal entry used to record sell of scrap

Account name                        

cash                                    $93

manufacture overhead                     $93

d) assuming only some jobs generate scrap

first we will calculate the overhead rate per hour

= ( $297000 + $25200) / 45,000 = $7.16

∴ Total cost of pierce stained glass window

= [ (direct material cost + number of labor hours ) + number of labor hours ( predetermined overhead rate ) ] - $93

= $4285 - $93  = $4192